Apple Shares Gain on Record Macintosh Sales, Holiday Forecast
By Connie Guglielmo
Oct. 23 (Bloomberg) -- Apple Inc. shares rose after Chief Executive Officer Steve Jobs delivered a 67 percent jump in fourth-quarter profit, topping analysts' estimates, on record Macintosh computer sales and growing iPod and iPhone demand.
The shares gained as much as 7.8 percent in extended U.S. trading yesterday after Cupertino, California-based Apple forecast sales and profit for this quarter that also beat analyst predictions. Jobs said he anticipated strong holiday orders.
``They're really in the sweet spot in terms of customer acceptance of their products,'' said Romeo Dator, who helps manage $5.3 billion in assets, including Apple shares, at San Antonio-based U.S. Global Investors Inc. ``People are flocking to their products.''
Apple sold 2.16 million Macs during the back-to-school shopping season and shipped 10.2 million iPod media players, as consumers snapped up new models. A $200 price cut last month on Apple's iPhone helped accelerate sales of that device, which reached 1.12 million in the quarter.
Apple shares climbed $13.64 to $188 in extended trading yesterday after earlier reaching a record $174.36 on the Nasdaq Stock Market. The stock has more than doubled this year and is the fourth-best performer on the Standard & Poor's 500 Index.
Fourth-quarter net income rose to $904 million, or $1.01 a share, from $542 million, or 62 cents, a year earlier. Sales climbed 29 percent to $6.22 billion in the period ended Sept. 29. Analysts had estimated profit of 85 cents on sales of $6.02 billion, according to a Bloomberg survey.
Room for Growth
``There's still a lot of room left for growth,'' Chief Operating Officer Timothy Cook told analysts yesterday.
Annual sales reached $24 billion, surpassing $20 billion for the first time in the company's 31-year history. Apple made more profit on average each week last quarter than it did in all of 2003.
Jobs is counting on the iPhone, released June 29, to sell 10 million units in 2008, capturing 1 percent of the mobile- phone market.
AT&T Inc., the exclusive U.S. provider of wireless service for the iPhone, gives Apple a share of the $60 to $220 it charges subscribers per month. Analysts expect San Antonio-based AT&T to report the number of customers who activated iPhone service when the company announces earnings today.
Apple's IPhone revenue will rise this quarter as the device debuts in Europe. Mobile-phone partners in the U.K., Germany and France plan to start selling the $399 product next month.
Holiday Forecast
Apple said profit this quarter will climb to about $1.42 a share on sales of $9.2 billion. That exceeds the $1.39 in profit and $8.57 billion in sales that analysts had anticipated.
Since Apple usually gives a forecast that's below analysts' estimates, this may be a sign the holiday quarter will be a ``blow out,'' said Piper Jaffray & Co. analyst Gene Munster.
Apple has updated its Mac computers with faster chips from Intel Corp. over the past two years. The products' sales rose 40 percent to $3.1 billion last quarter, accounting for half of revenue. The average selling price for the Mac was $1,433, compared with $1,375 a year ago.
IPod demand also fueled sales last quarter. Apple has sold more than 119 million players since unveiling the gadget in 2001. Jobs added new versions in September, including a video player called the iPod Touch that uses the same touch-screen technology as the iPhone.
``This is a company you want to own because of the momentum they have and the product cycles they have,'' said Andy Hargreaves, an analyst with Pacific Crest Securities in Portland, Oregon. He rates the shares ``outperform'' and owns them personally. ``Don't sell it until it breaks.''
To contact the reporter on this story: Connie Guglielmo in San Francisco at cguglielmo1@bloomberg.net
Last Updated: October 23, 2007 00:02 EDT |
